12 August 2025
If you are covering the latest US inflation data, please find below a comment from Lindsay James, investment strategist at Quilter:
“The latest US inflation data is a somewhat messy data print and contains something to please all political persuasions. Firstly, the annual consumer prices index (CPI) came in at the same 2.7% reading as last month and is a hair’s breadth below expectations. Clearly, this is good news for a US economy that is beginning to show signs of stress at the edges. Falling gasoline prices have helped in this regard and have certainly offset the tariff impact as it begins to feed through into the data.
“However, when you look at core inflation, that has come in modestly higher than expected and now stands at 3.1%. Much of this has been driven by the services sector, and this continues to be the sticky part of inflation, but we have also seen things such as used cars and trucks rise in price too. Inflation from tariffs is beginning to feed into the core figure but not yet at the stage that is a major concern for markets, with apparel - a sector highly exposed to tariffs - seeing monthly price increases of just 0.1% in July, down from 0.4% in June. It will be crucial to keep watching the inflation print for signs that it may spike again given the rise we have seen since April to date.
“For now, things are close enough to expectations to prevent any shock to the market. Indeed, investors have welcomed today’s inflation print by boosting their expectations that the Federal Reserve has enough cover to cut interest rates when it meets in September. Two rate cuts are expected by the year end, and if inflation can remain in check like this then they should be able to be delivered. But any signs that its stickiness gets worse and begins climbing again, and those rate cuts will need to be called into questions.”
